Coworking grows in London 42% as UK catches up to US

The number of new flexible working locations in Central London has grown 42% year-on-year, according to new report by flexible office specialist, Office Freedom.

The report also reveals that the growth is
driving ever more competitive rates, lowering the cost of all kinds of office
spaces within the capital. Over the last two years, office prices in
Hammersmith have fallen by 29%, whilst Paddington is 32% cheaper as a direct
result of greater flexible space availability. The rates in prestigious
Knightsbridge are still amongst the highest in Central London, but have dropped
by 38% between 2014 and 2018.

According to the new report, entitled The flexible workspace boom in London and
beyond, the UK is catching up to the US with total coworking space stock,
with 60m sq ft and 80m sq ft in the UK and US, respectively.

Richard
Smith, CEO of Office Freedom, explains:

“The
increase in availability of flexible working spaces from new operators and
attractive terms have maintained pressure on workstation rates. Whilst areas
such as Mayfair and Knightsbridge continue to demand the highest average
workstation rates at nearly £900, rates can be as low as just £328 in East London.

“Flexible
workspaces are booming and we are seeing more and more large corporates, such
as Amazon, Facebook and Microsoft embracing the benefits that flexible
workspaces bring. Savvy businesses, large and small, can easily look at the
average workstation rates and see where they can make substantial savings.”

The boom in flexible office space take-up is
also linked to changes in accounting standards, according to Office Freedom. The revised standards
bring future lease obligations onto the balance sheet and therefore makes short
term flexible leases more attractive.
Companies are considering the balance sheet and profit and loss impacts
of a 10-year lease compared with those of flexible offices and this is now a
key financial consideration.

Richard
Smith, CEO of Office Freedom, added:

“Companies
appreciate the link between modern workspaces and employee productivity and
wellness, and the right environment can have a beneficial effect on staff
recruitment and retention.”

In the US, coworking giants WeWork and Regus are reported to manage 23 million sq ft in the US between them. New York remains the coworking capital of the US with over 330 coworking centres. In Manhattan alone, flexible and coworking operators occupy 9.2m sq ft, with WeWork reaching a milestone last September after the behemoth became the largest office tenant in New York overtaking JP Morgan Chase and Co.